Three Ideas For Addressing NJ's Property Taxes

School funding may represent the crux of New Jersey’s property tax conundrum, but there are plenty of other ideas that have been kicked around Trenton to try to tackle the state’s notoriously high property taxes, or at the bear minimum extend some relief to the most vulnerable residents.

TRENTON — Gov.-elect Phil Murphy will take office in January with a long list of promises to keep, among them that he will boost state aid to underfunded public schools as a way to extend some much-needed property tax relief.

Murphy’s biggest obstacle, of course, will be finding the over $1 billion that’s estimated to be needed to bring most schools up to full funding.

School funding may represent the crux of New Jersey’s property tax conundrum, but there are plenty of other ideas that have been kicked around Trenton to try to tackle the state’s high property taxes, or at the bare minimum extend some relief to the most vulnerable residents.

Here’s a closer look at a few of them:

Restore energy tax receipts to municipalities

Close to $1 billion is collected by the state annually from utility and energy companies in lieu of property taxes for the use of public lands for infrastructure such as power lines, pipes, plants and substations, and services that utilities receive, notably police and fire protection.

For years, New Jersey mayors have complained that money is supposed to be returned to their communities as part of their annual state aid, but large sums of the revenue are being diverted to the general fund budget to pay for state services at the expense of towns, which have endured reduced or flat aid for several years.

The aid is used to pay for services and keep property taxes in check.

Bipartisan legislation by Assemblymen Troy Singleton, D-7th of Palmyra, and Jay Webber, R-26th of Morris Plains, has proposed phasing in the return of about $330 million of the revenue diverted from towns during previous fiscal years.

Mayors have pushed for the additional revenue but opposed the fine print of the legislation, which mandates that all additional aid be applied directly to offset property taxes.

Singleton is moving to the Senate next year, so keep an eye on whether the bill becomes an early priority for him there.

Increase eligibility for the Senior Freeze program

Few people feel the pain of New Jersey’s property taxes more than seniors on fixed incomes, who can ill afford to pay the additional $100 or more required from even small increases.

It’s why the Property Tax Reimbursement Program, commonly called the Senior Freeze, was created in the late 1990s.

The program reimburses eligible seniors and disabled residents for any property tax increases they pay above the base year they enrolled in the program.

Over 160,000 homeowners are expected to receive checks during the current fiscal year.

To qualify, homeowners must be age 65 or older or disabled, and must have lived in New Jersey for at least 10 years. They also must have lived in the same home for the past three years and be up to date on their property taxes and below the income cap.

The income cap has proved controversial. Under state law that created the program, the cap is supposed to rise with inflation. However, under Gov. Chris Christie’s administration, the cap has remained at $70,000 for several years.

The fixed cap has kept the cost of the program from ballooning with new recipients, but also has kept some seniors on the sidelines from the crucial tax relief programs.

Lawmakers have attempted to address the issue with more funding and budget language, but Christie has repeatedly used his line-item-veto authority to keep the cap at $70,000.

When Murphy takes office, seniors and their advocates will likely keep a close watch on his first budget proposal to see if it reflects an increase in eligibility for the key program.

Push governments to share more services

Towns, school districts and other government entities are now teaming on a host of services, ranging from street sweeping and drain clearing to joint purchasing and shared municipal courts.

Those shared service agreements have been credited with helping local governments save money. But critics argue that convincing towns to merge major big-ticket services such as police, public works and fire protection is needed to bring about reductions in property taxes rather than just slowing the increases.

Legislation penned by Senate President Stephen Sweeney, D-3rd of West Deptford, seeks to push towns and other local governments into more shared services by docking their state aid if they refuse.

Under the bill, the state’s Local Unit Alignment Reorganization and Consolidation Commission would recommend areas where local government entities could save money by merging and sharing services. Towns that vote down or refuse to implement the recommended sharing agreement would have their state aid docked in the amount that would have been saved.

The legislation also spells out how municipalities governed by civil service rules for hiring, firing and promoting employees should proceed when merging or sharing services with another town or government, including those without civil service.

Sweeney has said the measure is needed to encourage towns to set aside “home rule” preferences and find efficiencies through shared-service agreements. But municipal officials have opposed the measure’s penalty provision, arguing that residents should be able to choose what services they want to share and keep local and not be punished for it.

Some towns have also objected to some of the civil service components of the bill, arguing that they could potentially extend civil service protections to employees in towns that chose not to be governed by those rules.

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